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Investigating the Link Between Central Bank Independence and Inflation in Central and Eastern Europe

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  • Jane Bogoev
  • Goran Petrevski
  • Bruno S. Sergi
Abstract
This paper investigates the relationship between central bank independence (CBI) and inflation by using two different CBI measures in seventeen transition economies from Central and Eastern Europe from 1990 to 2009. It employs a fixed effects panel data model, which incorporates several control variables and accounts for possible autocorrelation in the residuals. The main finding of our empirical research is that central bank independence is negatively associated with inflation, even after controlling for the effects of other macroeconomic and institutional variables, such as the overall progress of liberalization. These results are broadly in line with the previous empirical findings in the literature.

Suggested Citation

  • Jane Bogoev & Goran Petrevski & Bruno S. Sergi, 2012. "Investigating the Link Between Central Bank Independence and Inflation in Central and Eastern Europe," Eastern European Economics, Taylor & Francis Journals, vol. 50(4), pages 78-96, July.
    • Handle: RePEc:mes:eaeuec:v:50:y:2012:i:4:p:78-96
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    References listed on IDEAS

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    2. Oatley, Thomas, 1999. "Central Bank Independence and Inflation: Corporatism, Partisanship, and Alternative Indices of Central Bank Independence," Public Choice, Springer, vol. 98(3-4), pages 399-413, March.
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    7. Mr. Tonny Lybek, 1999. "Central Bank Autonomy, and Inflation and Output Performance in the Baltic States, Russia, and Other Countries of the Former Soviet Union, 1995-1997," IMF Working Papers 1999/004, International Monetary Fund.
    8. Sergio DESTEFANIS & Maria Olivella RIZZA, 2007. "Central Bank Independence and Democracy: Does Corporatism Matter?," Rivista Internazionale di Scienze Sociali, Vita e Pensiero, Pubblicazioni dell'Universita' Cattolica del Sacro Cuore, vol. 115(4), pages 477-502.
    9. Cukierman Alex, 1992. "CENTRAL BANK STRATEGY, CREDIBILITY, AND INDEPENDANCE: THEORY AND EVIDENCE: Compte Rendu par Dominique Cariofillo," Journal des Economistes et des Etudes Humaines, De Gruyter, vol. 3(4), pages 581-590, December.
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    Cited by:

    1. Ichiro Iwasaki & Akira Uegaki, 2017. "Central Bank Independence and Inflation in Transition Economies: A Comparative Meta-Analysis with Developed and Developing Economies," Eastern European Economics, Taylor & Francis Journals, vol. 55(3), pages 197-235, May.
    2. Aleksandra Halka & Grzegorz Szafranski, 2018. "What Common Factors are Driving Inflation in CEE Countries?," Prague Economic Papers, Prague University of Economics and Business, vol. 2018(2), pages 131-148.
    3. Popescu Iulian Vasile, 2013. "The Independence Of Central Banks In Central And Eastern Europe-A Monetary Policy Strategy Based Approach," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 3, pages 158-172, June.
    4. Cep Jandi Anwar, 2023. "Heterogeneity Effect of Central Bank Independence on Inflation in Developing Countries," Global Journal of Emerging Market Economies, Emerging Markets Forum, vol. 15(1), pages 38-52, January.
    5. Stéphane Goutte & David Guerreiro & Bilel Sanhaji & Sophie Saglio & Julien Chevallier, 2019. "International Financial Markets," Post-Print halshs-02183053, HAL.

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